By TIOL News Service

MUMBAI, JUNE 12, 2014: THE appellant, a merchant exporter, procured 10,000 bags of sugar for exportation. The said consignment was manufactured and supplied by Nagar Taluka Sahakari Sakhar Karkhana Ltd.

The buyer wanted the sugar of certain grade. As the goods were not examined at the end of the manufacturer/supplier they were examined in the docks by the surveyor of the buyer at docks wherein it was found that out of 10,000 bags, 5980 bags were not upto the standard grade.

These bags were, therefore, not loaded on the vessel and were taken back to the unit.

In the circumstances, proceedings were initiated by the CC(EP), Mumbai against the appellant for confiscation of the goods alleging violation of Section 113 of the Customs Act, 1962.

The referred section is as below –

113 confiscation of goods attempted to be improperly exported, etc. - The following export goods shall be liable to confiscation:-

(k) Any goods cleared for exportation which are not loaded for exportation on account of any willful act, negligence or default of the exporter, his agent or employee, or which after having been loaded for exportation are unloaded without the permission of the proper officer.

The adjudicating authority held that the goods are liable for confiscation and consequently redemption fine and penalty were imposed on the appellant.

Aggrieved, the exporter is before the CESTAT.

The appellant submitted that in the earlier round of litigation, the Tribunal had remanded the matter back to the adjudicating authority. As much as in the remand proceedings also, without justifying as to how Section 113 (k) of the Customs Act, 1962 has been invoked or made applicable to the facts of the case, the adjudicating authority held that the goods are liable for confiscation and consequently imposed redemption fine and penalty.

It is also submitted that as there was no intention to export the non-standard goods, confiscation and imposition of redemption fine and penalty is not proper in law.

The Bench extracted the provisions of section 113(k) of the CA, 1962 and observed -

"…From the reading of the above provisions, it is clear that the goods can be held liable for confiscation on account of any willful act, negligence or default of the exporter, his agent of employee. From the facts of this case, it is clear that the appellant has taken proper care before the exportation of the goods. In this circumstance, it cannot be held that the appellants have violated the provisions of Section 113 (k) of the Act. In these circumstances, I hold that the goods are not liable for confiscation and consequently redemption fine and penalty are not imposable…."

The appeal was allowed with consequential relief.

(See 2014-TIOL-1000-CESTAT-MUM)